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progress. In that regard, petitioner did not show that amounts
claimed in cost of goods sold did not represent poured/hardened
concrete for which the profit/income had not yet been
received/reported.
It must also be emphasized that petitioner decided which
concrete supplier to use and had contractual relationships with
particular suppliers. It was petitioner who placed orders and
accepted delivery of the concrete at the job site. Although the
developer’s agent was occasionally on the job site for inspection
of the concrete, petitioner bore the risk of loss from a
substandard or misplaced concrete order. Petitioner had the
right under its contract with the concrete supplier to refuse
delivery of substandard concrete, and, under normal conditions,
it was petitioner who was present at and controlled the pouring
of concrete into the forms. Finally, petitioner took possession
of the concrete at the time it was being poured and likely held
title to the concrete under California law.
The majority labels petitioner’s contractual relationship
with the developer as one for services, but that same contract
contains the specifications for the final product that petitioner
was obligated to produce. Other portions of the contract set
forth the materials that petitioner must provide and include in
the finished product. It is important to note that we are not
presented with a situation where the developer purchases
materials and the contractor simply provides labor and incidental
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